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Behavioral Law and Economics: Substance and Methodology

Tuesday, April 3, 2012

Notre Dame Law School

For several decades, one of the leading approaches to legal theory has been the economic analysis of law. The theory of human behavior underlying standard economic analysis of law (like economic analysis more generally) is the rational choice theory. According to this theory, people strive to enhance their own well-being, choosing the available option that would maximize their expected utility. In the past two decades or so, hand-in-hand with comparable developments in economics, the economic analysis of law has been challenged by a growing body of experimental and empirical studies attesting to prevalent and systematic deviations from the assumptions of economic rationality. These studies have questioned both the assumption of thin, cognitive rationality (by showing that people’s preferences often do not comply with the rules of dominance, transitivity, and invariance) and the assumption of thick, motivational rationality (by pointing to the role of motivations such as envy and altruism).…

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